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Financial Analysis of D.G Khan Cement Company Ltd.

DEDICATIONS

Dedication is a devotion to whom we


love ,who are benefactors , who prays
for us and who made us capable of
doing all these under this head , there
are two Personalities which are our
Parents , our Teachers. So we have
devoted our report to our beloved
PARENTS AND beloved TEACHERS.

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Financial Analysis of D.G Khan Cement Company Ltd.

Sr. No List of Content Page No.


1 Preface 2

2 Acknowledgement 3

3 Introduction of DG Cement Factory 4-5

4 Balance Sheet 6-7

5 Income Statement 8-9

6 Cash Flow Statement 9-11

7 Horizontal Analysis of Balance Sheet 11-18

8 Vertical Analysis of Balance Sheet 18-26

9 Horizontal Analysis of Income Statement 27-34

10 Vertical Analysis of Income Statement 35-42

11 Horizontal Analysis of Cash Flow Statement 42-47

12 Vertical Analysis of Cash Flow Statement 47-53

13 Ratio’s Analysis 53-73

14 Univariate Model 74-75

15 Multivariate Model 76-77

16 Conclusion 78

Preface

As the world is growing rapidly, the businesses are also moving to

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Financial Analysis of D.G Khan Cement Company Ltd.

become the huge one. And by that result, more and more people want to
become a master in these businesses. The main purpose in the finance
field is to know how the financial analysis is done. We all know that
finance is the blood of any business and without it no business can run.
Financial analysis of a company is very difficult and the most important
task and by doing this I am able to know the whole financial position and
financial structure of the company.
Simply by looking at how much cash a company has does not provide
enough information. The financial statements need to be analyzed to
measure a company’s performance and to compare it with other firm’s in
the same industry. The resulting information is intended to be useful to
owners, potential investors, creditors, analysts, and others as the
analysis evaluates the past performance, future potential and financial
position of the firm.
This report is an analysis of financial statements of D.G. Khan Cement
Company Ltd. This report has been prepared with an objective to develop
analytical skills required to interpret the information (explicit as well as
implicit) provided by the financial statements and to measure the
company’s performance during the past few years. The financial
statements are analyzed using traditional evaluation techniques such as
horizontal analysis, vertical analysis and trend analysis. Ratios are an
important tool in analyzing the financial statements & the company’s
profitability, solvency & liquidity. Sincere attempts have been made to
make this report error free but if any errors and omissions are found then
we apologize for that.

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Financial Analysis of D.G Khan Cement Company Ltd.

Acknowledgement

In the name of “Allah”, the most beneficent and merciful who


gave us Strength and knowledge to complete this report. This
has proved to be a great experience.
I would like to express our gratitude to our Finance teacher
Mr.Nadeem Ahmad who gave us this opportunity to fulfill
this report.

DG KHAN CEMENT FACTORY

INTRODUCTION

DG Khan Cement Company Limited (DGKC) is producer and seller of ordinary Portland and
sulphate-resistant cement. The company is a unit of Nishat group, which is a leading and
diversified business group with a strong presence in three most important sectors of
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Financial Analysis of D.G Khan Cement Company Ltd.

Pakistan: textiles, cement and financial services.

The group also has considerable stake in insurance, power generation, paper products and
aviation sectors. It is listed on all the three stock exchanges of the country. DGKC was
established in 1978 under the management control of State Cement Corporation of Pakistan
Limited (SCCP).

The company started its commercial production on April 1986 with 2000 tons per day (TPD)
clinker based on dry process technology. In 1992, the company was acquired by the Nishat
Group under the privatization programme of the government. Since its privatization, DGKC
has undergone intensive capacity expansion. As a result, it is presently the second largest
cement producer of the sector. The company had a total installed capacity of 37,156,750
metric tons as at June 2008. DGKC had a market share of 13% in the local cement industry
during the first nine months of 2009.

DGKC has two plants at Dera Ghazi Khan and a new Greenfield cement plant at Khairpur
village, which was started in FY04 and began commercial production in June 2007. The
plant has a capacity of 2.1mtpa. Commencement of production at the new plant and
effective and efficient operations by the management led to 70% and 66% increase in the
volume of clinker and cement production respectively. The company has its own power
generation plant along with WAPDA supply. A dual-fuel power generation plant at Khairpur
cement plant also started its commercial operations successfully in 2008.

BRANDS (PRODUCTS)

Two different products are produced at DGKCC namely Ordinary Portland cement and
Sulphate Resistant Cement. These products are marketed through two different brands:

D.G Brands & Elephant brand ordinary Portland Cement.(It is also called the OPC and its
demands is about 9% because it is commonly used .

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Financial Analysis of D.G Khan Cement Company Ltd.

D.G brand Sulphate Resistant cement ( it is also called the SRC and its demand is about
8% because it is only used in standing the foundation .Its main works is to finish the pours
produced while standing the foundation and make building more strong.

D.G cement company limited


Balance sheet

2005 2006 2007 2008 2009


Asset Rs. Rs. Rs. Rs. Rs.

Current Asset
Store, spare and loose tools 1,035,081 836,049 1,496,291 2,299,250 2,935,880
Stock -in-trade 100,994 226,286 295,140 445,856 899,836
Trade debts 76,238 74,165 144,245 366,173 513,966
investments 2,769,134 8,543,763 16,933,790 15,082,582 7,785,968
advance, deposits, 121,486 152,465 229,315 782,358 908,100

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Financial Analysis of D.G Khan Cement Company Ltd.

prepayment and other


receviables
Cash and bank balances 93,836 77,167 116,173 226,372 243,842
Total current asset 4,196,769 9,909,895 19,214,954 19,202,591 13,287,592

Non current assets


Property, plant and equipment 6,637,237 7,521,723 22,117,551 22,977,894 24,345,793
Asset subject to finance lease 317,262 295,058 133,376 5,135 0
Capital work in progress 3,983,175 11,759,677 1,907,063 2,488,307 1,750,208
Investments 2,610,634 4,482,213 8,174,474 6,795,961 3,172,508
Long term loans, advances
and deposits 271,428 335,810 196,913 523,046 166,940
Total non current asset 13,819,736 24,394,481 32,529,377 32,790,343 29,435,449

Total asset 18,016,505 34,304,376 51,744,331 51,992,934 42,723,041

Equity and liabilities

Current liabilities
finance under mark up
arrangement secured 960,620 0 0 0 0
Creditor , accured and other
liabilities 1,154,426 0 0 0 0
Derivative forgeign currency
forward option 306,048 0 0 0 0
Trade and other payables 0 1,406,869 1,027,274 1,370,336 1,435,420
Accured markup 0 340,757 342,612 364,664 531,772
Short term borrowing -
secured 0 2,613,695 3,942,972 7,597,020 9,068,575
Current portion of non- current
liabilities 599,674 1,619,025 2,042,281 2,687,608 4,763,942
Provision for taxation 35,090 35,090 35,090 35,090 35,090
Total Current liabilities 3,055,858 6,015,436 7,390,229 12,054,718 15,834,799

Non Current Liabilities


Long term finances 4,899,225 7,372,468 8,686,447 8,411,051 4,375,837
liabilities against assets
subject to finance lease 131,985 28,886 1,141 0 0
Long term deposits 28,674 33,814 79,467 73,890 73,765
Retirement and other benefits 45,765 26,572 39,862 54,018 78,622
Deferred taxation 537,000 1,559,000 1,624,000 1,319,000 1,441,576
Total non Current liabilities 5,642,649 9,020,740 10,430,917 9,857,959 5,969,800

Capital and Liabilities


Authorised capital 3,000,000 3,000,000 10,000,000 10,000,000 10,000,000
Issued , subscribed and paid
up capital 1,843,937 1,843,937 2,535,412 2,535,412 3,042,494
Reserves 7,196,568 15,085,354 29,630,084 27,595,698 17,401,220
Accumulated Profit / (loss) 277,493 2,330,558 1,757,689 (50,853) 474,728
Share deposit money 8,351

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Financial Analysis of D.G Khan Cement Company Ltd.

Total Capital and liabilities 9,317,998 19,268,200 33,923,185 30,080,257 20,918,442

Total Equity and


Capital 18,016,505 34,304,376 51,744,331 51,992,934 42,723,041

D.G Cement
Income Statement
2005 2006 2007 2008 2009
sales net 5279560 7,955,665 6419625 12445996 18038209
cost of sales
raw and paking materialcunsumed 374287 464,080 580717 1381169 1527430
salaries,wages,and other benefits 185914 230,854 293929 478790 641408
electricity and gas 322979 470,625 605335 1644759 1427631
furnace oil /coal 1493514 2,114,667 1902567 4595975 6603908
stores and spare consumed 357762 388,113 383159 761950 879772
repair and mentainence 9997 18,233 22913 98482 131911
insurance 23642 20,542 21840 43082 45573
depriciation on property plant and
equipment 330100 341,940 469367 1346428 1354851
other expense 79153 106,783 105402 183637 196081
C.G.S 3177348 4,155,837 4387229 10534272 12808565
opening work in process 210983 50,205 161989 142686 118292
closing workin process (50,205) (161,989) (142,686) (118,292) (387,444)
0 160778 (111,784) 69765 24394 269152
cost ofgoods manufavtured 3338126 4,044,053 4456994 10558666 12539413
opening stock offinishedgoods 38616 19,468 5058 69728 78369
closing stock of finished goods (19,468) (5,058) (69,728) (78,369) (249,916)
0 19148 14,410 25370 8641 171547
LESS:own cunsumption capitalised 26505 65,641 43984 19302 9387
cost of sales 3330769 3,992,822 4387640 10530723 12358479
grossprofit 1948791 3,962,843 2031985 1915273 5679730
administrative expense (76,480) 121,953 (104,169) (111,658) (141,852)
selling and distribution expense (60,905) 34,352 (65,122) (561,465) (1,871,517)
other operating expense (93,786) 191,850 (139,721) (581,913) (795,854)
other operating income 707692 294,114 479420 847344 770137
impairment on inestment (257,386)
profit from operations 2425312 3,908,802 2202393 1507581 3383258
finance cost (304,041) (450,696) (467,759) (1,749,837) (2,606,358)
shares of loss of assoiated co. (9,573) (14,163) (8,674)
profit/loss before tax 2121271 3,448,533 1720471 (250,930) 776900
(1,030,078
taxation (439,193) ) (98,000) 197700 (251,319)
profit /loss for year 1682078 2,418,455 1622471 (53,230) 525319
earning/lossper share 9.12 10.37 6.43 0.21 1.96

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Financial Analysis of D.G Khan Cement Company Ltd.

DG.Cement.
Cash flow statement.

Years.

2005 2006 2007 2008 2009


Cash flow from operating Rs. Rs. Rs. Rs. Rs.
activities.
Cash generated from
operations. 2,768,564 4,474,518 997,019 1,263,660 3,829,987

Finance cost paid. (239,581) (250,029) (466,185) (1,727,177) (2,439,250)


Retirement and other benefits
paid. (1,724) (7,573) (43,067) (5,054) (6,934)

Tax paid. (40,809) (31,604) (57,759) (135,780) (235,684)


Net(decrease)/increase in long
term deposits. (1,691) 5,140 45,653 (5,577) (125)

Net cash from operating


2,484,759 4,190,452 475,661 (609,928) 1,147,994
activities.

Cash flow from investing


activities.
Purchase of equipment, plant
and property. (3,705,612) (9,005,201) (5,095,269) (2,698,370) (1,995,630)

Purchase of investment. (193,543) (167,039) (320,955) (188,339) (38,878)

Sale proceeds of investment. 13,000 90


Net(increase)/decrease of long
term loan,advances and
deposits. (246,407) (64,382) 138,897 (325,502) 356,106
Sale proceeds of property,plant
and equipment. 4,337 13,030 18,608 26,655 4,076

Dividend received. 157,005 265,882 465,779 820,435 707,242

Interest received. 5,094 3,681 8,333 42,205

Net cash used in investing


(3,984,220) (8,939,616) (4,789,169) (2,356,788) (924,879)
activities.

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Financial Analysis of D.G Khan Cement Company Ltd.

Cash flow from financing


activities.
Proceeds from issuance of
share capital. 1,602,666 1,014,164
Share capital deposit money
8,351
received.
Repayment of non
particepatory redeemable
capital (199,920)

Proceeds from long term loans. 2,900,000 4,000,000 3,332,548 3,000,000 300,000

Repayment of long term loans. (471,429) (556,883) (1,481,302) (3,178,083) (2,989,690)


Repayment of finance lease
liabilities. (68,583) (96,570) (85,932) (19,957) (1,141)

Dividend paid. (250,705) (275,478) (344,743) (379,093) (533)

Net cash from/(used in)


1,909,363 3,079,420 3,023,237 (577,133) (1,677,200)
financing activities.

Net increase/(decrease) in
cash and cash equivalent. 409,902 (1,669,744) (1,290,271) (3,543,849) (1,454,085)
Cash and cash equivalent at
the beginning of the year. (1,276,686) (866,784) (2,536,528) (3,826,799) (7,370,648)

Cash and cash equivalent at (866,784) (2,536,528) (3,826,799) (7,370,648) (8,824,733)


the end of the year.

D.G cement

Balance Sheet

Horizontal Analysis

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Financial Analysis of D.G Khan Cement Company Ltd.

2005 2006 2007 2008 2009

Current Assets % % % % %

Store, spare and loose tools 100 81 145 222 284

Stock -in-trade 100 224 292 441 891

Trade debts 100 97 189 480 674

investments 100 309 612 545 281

advance, deposits, prepayment and other


receivables 100 126 189 644 747

Cash and bank balances 100 82 124 241 260

Total current asset 100 236 458 458 317

Non current assets

Property, plant and equipment 100 113 333 346 367

Asset subject to finance lease 100 93 42 2 0

Capital work in progress 100 295 48 62 44

Investments 100 172 313 260 122

Long term loans, advances and deposits 100 124 73 193 62

Total non current asset 100 177 235 237 213

Total asset 100 190 287 289 237

Equity and liabilities

Current liabilities

finance under mark up arrangement secured 100 0 0 0 0

Creditor , accrued and other liabilities 100 0 0 0 0

Derivative foreign currency forward option 100 0 0 0 0

Trade and other payables 0

Accrued markup 0

Short term borrowing - secured 0

Current portion of non- current liabilities 100 270 341 448 794

Provision for taxation 100 100 100 100 100

Total Current liabilities 100 197 242 394 518

Non Current Liabilities

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Financial Analysis of D.G Khan Cement Company Ltd.

Long term finances 100 150 177 172 89

liabilities against assets subject to finance


lease 100 22 1 0 0

Long term deposits 100 118 277 258 257

Retirement and other benefits 100 58 87 118 172

Deferred taxation 100 290 302 246 268

Total non Current liabilities 100 160 185 175 106

Capital and Equity

Authorized capital 100 100 333 333 333

Issued , subscribed and paid up capital 100 100 137 137 165

Reserves 100 210 412 383 242

Accumulated Profit / (loss) 100 840 633 -18 171

Share deposit money

Total Capital and Equity 100 207 364 323 224

Total Equity and Liabilities 100 190 287 289 237

D.G cement

Balance Sheet

Horizontal Analysis

Current Assets:

Store, spare and loose tools:

Since the computed value of Stores, Spares and loose tools under Horizontal Analysis
taking year 2005 as a base decrease in 2006. However it shows a continuous increase
over the years till year 2009. So, the overall tendency of Stores, Spares and loose tools in
the last five years is increasing

Stock -in-trade:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Stock-in-trade under Horizontal Analysis taking year 2005 as a
base has been increased significantly over the years till year 2009. So, the overall tendency
of Stock-in-trade in the last five years is increasing.

Trade debts:

Since the computed value of trade debts under Horizontal Analysis taking year 2005 as a
base shows a decrease in year 2006 but it is significantly increased in year 2007 to 2009.
The overall tendency of trade debts in the last five years is increasing.

Investments:

Since the computed value of Investments under Horizontal Analysis taking year 2005 as a
base is showing a significant increase till year 2009. The overall tendency of Investments in
the last five years is increasing.

Advance, deposits, prepayment and other receivables:

Since the computed value of Advances, deposits, prepayments and other receivables under
Horizontal Analysis taking year 2005 as a base is showing an increasing trend till year 2009,
The overall tendency of Advances, deposits, prepayments and other receivables in the last
five years is increasing.

Cash and bank balances:

Since the computed value of Cash and bank balances under Horizontal Analysis taking year
2005 as a base is decrease in year 2006. However, it is showing a continuous increase over
the years till year 2009 .The overall tendency of Cash and bank balances in the last five
years is increasing.

Total current asset:

Since the computed value of Cash and bank balances under Horizontal Analysis taking year
2005 as a base is showing a continuous increase over the years till year 2009 .The overall
tendency of Cash and bank balances in the last five years is increasing.

Non current assets:

Property, plant and equipment:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Property, plant and equipment under Horizontal Analysis taking
year 2005 as a base, tends to continuous increase over the years till year 2009.. The overall
tendency of Property, plant and equipment in the last five years is increasing.

Asset subject to finance lease:

Since the computed value of Assets subject to finance lease under Horizontal Analysis
taking year 2005 as a base, has been significantly decreased over the years till 2008.There
is no account in year 2009. The overall tendency of Assets subject to finance lease in the
last five years is decreasing.

Capital work in progress:

Since the computed value of Capital work in process under Horizontal Analysis taking year
2005 as a base is increasing in year 2006. However, it is showing decrease till 2009.The
overall tendency of Capital work in process in the last five years is fluctuating.

Investments:

Since the computed value of Investments under Horizontal Analysis taking year 2005 as a
base is showing continuous increase till year 2009. The overall tendency of Investments in
the last five years is increasing.

Long term loans, advances and deposits:

Since the computed value of Long term loans and deposits under Horizontal Analysis taking
year 2005 as a base is increasing in year 2006. However, it decreases in year 2007. Long
term loans and deposits tends to increase in year 2008 . Moreover, Long term loans and
deposits show a decrease in year 2009. The overall tendency of Long term loans and
deposits in the last five years is fluctuating.

Total non current asset:

Since the computed value of Total non current assets under Horizontal Analysis taking year
2005 as a base, is showing a continuous increase in year 2007 to 2009. The overall
tendency of Total non current assets in the last five years is increasing.

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Financial Analysis of D.G Khan Cement Company Ltd.

Total asset:

Since the computed value of Total assets under Horizontal Analysis taking year 2005 as a
base, is showing a continuous increase in year 2007 to 2009. The overall tendency of Total
assets in the last five years is increasing.

Equity and liabilities:

Current liabilities:

Current portion of non- current liabilities:

Since the computed value of Current portion of non-current liabilities under Horizontal
Analysis taking year 2005 as base is showing significant increase over the years till
2009.The overall tendency of the Current portion of non-current liabilities in the last five
years is increasing.

Provision for taxation:

Since the computed value of Provision for taxation under Horizontal Analysis taking year
2005 as base is same over the years till 2009.The overall tendency of the Provision for
taxation in the last five years is same.

Total Current liabilities:

Since the computed value of total current liabilities under Horizontal Analysis taking year
2005 as base is showing significant increase over the years till 2009.The overall tendency of
the total current liabilities in the last five years is increasing.

Non Current Liabilities:

Long term finances:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of long term finances under Horizontal Analysis taking year 2005
as base is showing a continuous increase till year 2008.Moreover, long term finances has
been significantly decreased in year 2009.The overall tendency of the long term finances in
the last five years is fluctuating.

Liabilities against assets subject to finance lease:

Since the computed value of Liabilities against assets subject to finance lease under
Horizontal Analysis taking year 2005 as base is showing an in significant decrease in the
year 2007. Then there is no account for Liabilities against assets subject to finance lease.
The overall tendency of the long term finances in the last five years is decreasing.

Long term deposits:

Since the computed value of long term deposits under Horizontal Analysis taking year 2005
as base is showing an increase in the year 2007 then it decreased in year 2008.Moreover,
long term deposits show a slightly decrease in year 2009.The overall tendency of the long
term deposits in the last five years is fluctuating.

Retirement and other benefits:

Since the computed value of Retirements and other benefits under Horizontal Analysis
taking year 2005 as base is decreasing in 2006 to 2007. However, it is showing an
increasing trend over the years till year 2009.The overall tendency of the Retirements and
other benefits in the last five years is fluctuating.

Deferred taxation:

Since the computed value of Deferred taxation under Horizontal Analysis taking year 2005
as base is showing an increasing trend till year 2009.The overall tendency of the Deferred
taxation in the last five years is increasing.

Total non-current liabilities:

Since the computed value of Total non-current liabilities under Horizontal Analysis taking
year 2005 as base is showing a significant increase over the years till year 2009. The overall
tendency of the Total non-current liabilities in the last five years is increasing.

Capital and Equity:


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Financial Analysis of D.G Khan Cement Company Ltd.

Authorized capital:

Since the computed value of Authorized capital under Horizontal Analysis taking year 2005
as a base, is same over the years till year 2009.

Issued, subscribed and paid up capital:

Since the computed value Issued, subscribed and paid up capital under Horizontal Analysis
taking year 2005 as a base showing an increase in year 2007 and same in year 2008, but it
tends to increase in year 2009.. The overall tendency of Issued, subscribed and paid up
capital in the last five years is increasing.

Reserves: Since the computed value Reserves under Horizontal Analysis taking year
2005 as a base is showing a significant increase till year 2009. . The overall tendency of
Reserves in the last five years is increasing.

Accumulated Profit / (loss):

100 840 633 -18 171

Total Capital and Equity:

Since the computed value of total capital and equity under Horizontal Analysis taking year
2005 is showing a continuous increase in year 2006 to 2009.The overall tendency of total
capital and Equity in the last five years is increasing.

Total Equity and Liabilities:

Since the computed value of total liabilities and equity under Horizontal Analysis taking year
2005 is showing a continuous increase in year 2006 to 2009.The overall tendency of total
Equity and liabilities in the last five years is increasing.

D.G cement.

Balance Sheet.

Vertical analysis.

Asset 2005 2006 2007 2008 2009

Percent % % % % %

Current Asset

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Financial Analysis of D.G Khan Cement Company Ltd.

Store, spare and loose tools 5.7 2.4 3 4.4 7

Stock -in-trade 0.6 0.7 0.6 0.9 2.1

Trade debts 0.4 0.2 0.3 0.7 1.2

investments 15.4 25 33 29 18.2

advance, deposits, prepayment and other 0.7 0.4 0.4 2 2.1


receviables

Cash and bank balances 0.5 0.2 0.2 0.4 0.6

Total current asset 23.3 28.9 37.1 37 31

Non current assets

Property, plant and equipment 36.8 22 42.7 44.2 57

Asset subject to finance lease 1.8 0.9 0.3 0.01 0

Capital work in progress 22.1 34.3 3.7 5 4

Investments 14.5 13.1 15.8 13 7.00E+00

Long term loans, advances and deposits 1.5 1 0.4 1 0.4

Total non current asset 76.7 71.1 63 63 69

Total asset 100 100 100 100 100

Equity and liabilities

Current liabilities

finance under mark up arrangement secured 5.3 0 0 0 0

Creditor , accured and other liabilities 6.4 0 0 0 0

Derivative forgeign currency forward option 1.7 0 0 0 0

Trade and other payables 0 4.1 2 3 3.4

Accured markup 0 1 0.7 1 1.2

Short term borrowing - secured 0 8 8 15 21

Current portion of non- current liabilities 3.3 5 4 5 11

Provision for taxation 0.2 0.1 0.1 0.1 0.1

Total Current liabilities 17 18 14.3 23 37

Non Current Liabilities

Long term finances 27.2 21.5 16.8 16 10

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Financial Analysis of D.G Khan Cement Company Ltd.

liabilities against assets subject to finance 0.7 0.1 0.002 0 0


lease

Long term deposits 0.2 0.1 0.2 0.1 0.2

Retirement and other benefits 0.3 0.1 0.1 0.1 0.2

Deferred taxation 3 5 3 3 3.4

Total non Current liabilities 31.3 26.3 20.2 19 14

Capital and Equity

Authorised capital

Issued , subscribed and paid up capital 10.2 5.4 5 5 7.1

Reserves 40 44 57.3 53 40.7

Accumulated Profit / (loss) 1.5 7 3.4 -0.1 1.11

Share deposit money 0.02 0 0 0

Total Capital and Equity 51.7 56.2 65.6 58 49

Total Equity and Liabilities 100 100 100 100 100

D.G cement

Balance Sheet Vertical analysis

Current Assets:

Stores, spares and loose tools:

Since the computed value of Stores, Spares and loose tools under vertical Analysis taking
total assets as base shows a decrease in year 2006 and there is slightly increase in year

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Financial Analysis of D.G Khan Cement Company Ltd.

2007. However, Stores, Spares and loose tools shows a continuous increase till year 2009.
The overall tendency of Stores, Spares and loose tools in the last five years is fluctuating.

Stock-in-trade:

Since the computed value of stock-in-trade under vertical Analysis taking total assets as
base shows a slightly increase in year 2006 and tend to decrease in year 2007. However,
stock-in-trade shows a continuous increase till year 2009. The overall tendency of stock-in-
trade in the last five years is fluctuating.

Trade debts:

Since the computed value of trade debts under vertical Analysis taking total assets as base
shows a decrease in year 2006 and there is slightly increase in year 2007. However, trade
debts show a continuous increase till year 2009. The overall tendency of trade debts in the
last five years is fluctuating.

Investments:

Since the computed value of Investments under vertical Analysis taking total assets as base
shows a continuous increase in year 2006 to 2009. The overall tendency of Investments in
the last five years is increasing.

Advances, deposits, prepayments and other receivables:

Since the computed value of Advances, deposits, prepayments and other receivables under
vertical Analysis taking total assets as base show a decrease in year 2006 to 2007.
However, Advances, deposits, prepayments and other receivables tend to continuous
increase in year 2008 to 2009. The overall tendency of Advances, deposits, prepayments
and other receivables in the last five years is fluctuating.

Cash and bank balances:

Since the computed value of Cash and bank balances under vertical Analysis taking total
assets as base show a decrease in year 2006 to 2007. However, Cash and bank balances
tend to continuous increase in year 2008 to 2009. The overall tendency of Cash and bank
balances in the last five years is fluctuating.

Total current assets:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Total current assets under vertical Analysis taking total assets
as base has show an continuous increase in year 2006 to 2009. The overall tendency of
Total current assets in the last five years is increasing.

Non Current Assets:

Property, plant and equipment:

Since the computed value of Property, plant and equipment under vertical Analysis taking
total assets as base shows a decrease in year 2006.However, Property, plant and
equipment is showing a significantly increase till year 2009. The overall tendency of
Property, plant and equipment in the last five years is fluctuating.

Assets subject to finance lease:

Since the computed value of Assets subject to finance lease under vertical Analysis taking
total assets as base is showing a continuous decrease over the years till 2008.There is no
account in year 2009 the overall tendency of Assets subject to finance lease in the last five
years is decreasing.

Capital work in progress:

Since the computed value of Capital work in process under vertical Analysis taking total
assets as base is showing an increase in year 2006.However, Capital work in process
tends to a significantly decrease in year 2007 . Moreover, It shows an increase in year 2008
then decrease in year 2009.The overall tendency of Capital work in process in the last five
years is fluctuating.

Investments:

Since the computed value of Investments under vertical Analysis taking total assets as base
is showing a decrease in year 2006.However, Investments tends to increase in year 2007.
Moreover, Investments are decreasing in year 2008 to 2009. The overall tendency of
Investments in the last five years is fluctuating

Long term loans and deposits:

Since the computed value of Long term loans and deposits under vertical Analysis taking
total assets as base tends to decrease in year 2006 to 2009. The overall tendency of Long
term loans and deposits in the last five years is fluctuating.

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Financial Analysis of D.G Khan Cement Company Ltd.

Total non current assets:

Since the computed value of Total non current assets under vertical Analysis taking total
assets as base tends to decrease in year 2006 to 2008.However, Total non current assets
show an increase in year 2009. The overall tendency of Total non current assets in the last
five years is fluctuating.

Total Assets:

Since the computed value of Total assets under vertical Analysis taking total assets as base
is same over the years till 2009.The overall tendency of Total assets in the last five years is
same.

Equity and liabilities

Current Liabilities:

Trade and other payables:

Since the computed value of trade and other payables under vertical Analysis taking total
liabilities and equity as base is showing increase in year 2006. However, the trade and other
payables volume has decrease in year to year 2007. Moreover, the value of trade and other
payables increase in 2008 to 2009. The overall tendency of the trade and other payables in
the last five years is fluctuating.

Accrued markup:

Since the computed value of accrued markup under vertical Analysis taking total liabilities
and equity as base is increasing in year 2006 to 2009. The overall tendency of accrued
markup in the last five years is increasing.

Short term borrowing – secured: Since the computed value of accrued markup under
vertical Analysis taking total liabilities and equity as base is showing an increasing trend in
year 2006 to year 2009. The overall tendency of accrued markup in the last five years is
increasing.

Current portion of non - current liabilities:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of current portion of non-current liabilities under vertical Analysis
taking total liabilities and equity as base is showing increase in year 2006. However, current
portion of non-current liabilities has decreased in year 2007 and increased 2008 to 2009.
The overall tendency of current portion of non-current liabilities in the last five years is
fluctuating.

Provision for taxation:

Since the computed value of provision for taxation liabilities under vertical Analysis taking
total liabilities and equity as base is show decrease in year 2006 and constant till 2009. The
overall tendency of provision for taxation in the last five years is fluctuating.

Total current liabilities:

Since the computed value of total current liabilities under vertical Analysis taking total
liabilities and equity as base is show an increase in year 2006 and decreased in
2007.However it increased in 2008 to 2009. The overall tendency of total current liabilities in
the last five years is fluctuating.

Non Current Liabilities

Long term finances:

Since the computed value of non current liabilities under vertical Analysis taking total
liabilities and equity as base shows a continuous decrease till 2009. The overall tendency of
total current liabilities in the last five years is decreasing

Liabilities against assets subject to finance lease:

Since the computed value of liabilities against assets subject to finance lease under vertical
Analysis taking total liabilities and equity as base is show decrease in year 2006 & year 2007
and there is no account for liabilities against assets subject to finance lease in 2008 to
2009.The overall tendency of liabilities against assets subject to finance lease in the last five
years is fluctuating

Long term deposits: Since the computed value of long term deposits under vertical Analysis
taking total liabilities and equity as base is show decrease in year 2006 & increase in year
2007 and decreased in year 2008 and then tends to increase in year 2009. The overall
tendency of long term deposits in the last five years is fluctuating.

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Financial Analysis of D.G Khan Cement Company Ltd.

Retirement and other benefits:

Since the computed value of retirement and other benefits under vertical Analysis taking
total liabilities and equity as base is showing decrease in year 2006. However, retirement
and other benefits volume are constant till year 2008 and the slightly increased in 2009. The
overall tendency of retirement and other benefits in the last five years is fluctuating.

Deferred taxation:

Since the computed value of deferred taxation under vertical Analysis taking total liabilities
and equity as base is showing increase in year 2006. However, deferred taxation volume
decreased in year 2007 to 2008 and then tends to increase in 2009. The overall tendency of
deferred taxation in the last five years is fluctuating.

Total non current liabilities:

Since the computed value of total non current liabilities under vertical Analysis taking total
liabilities and equity as base is show a continuous decrease till year 2009. The overall
tendency of total non current liabilities in the last five years is decreasing.

Capital and Equity

Authorized capital:

Issued, subscribed and paid up capital:

Since the computed value Issued, subscribed and paid up capital under vertical Analysis
taking total liabilities and equity as base has been decrease in year 2006 and has decreased
slightly, since year 2007 to 2008. However Issued subscribed and paid up capital show an
increase in year 2009. The overall tendency of Issued, subscribed and paid up capital in the
last five years is fluctuating

Reserves:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value Reserves under vertical Analysis taking total liabilities and equity
as base has been increased since 2006 to 2007 and then tends to decrease in year 2008 to
2009. The overall tendency of Reserves in the last five years is fluctuating.

Accumulated Profit / (loss): 1.5 7 3.4 -0.1 1.11

Total Equity:

Since the computed value of total equity under vertical Analysis taking total liabilities and
equity as base shows an increase in year 2006 to 2007 and it decreased in year 2008 to
2009.The overall tendency of of total equity in the last five years is fluctuating.

Total equity and liabilities:

Since the computed value of total liabilities and equity under vertical Analysis taking total
liabilities and equity as base is same over the years till 2009.

D.G Cement

Income Statement Horizontal Analysis

2005 2006 2007 2008 2009


Description
% % % % %

Sales Net 100 150.69 121.59 235.74 341.66

Cost Of Sales 0 0.00 0.00 0.00 0.00

Raw and Packing Material consumed 100 123.99 155.15 369.01 408.09

Salaries , Wages, and Other Benefits 100 124.17 158.10 257.53 345.00

Electricity and Gas 100 145.71 187.42 509.25 442.02

Furnace Oil /Coal 100 141.59 127.39 307.73 442.17

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Financial Analysis of D.G Khan Cement Company Ltd.

Stores and Spare Consumed 100 108.48 107.10 212.98 245.91

Repair and Maintenance 100 182.38 229.20 985.12 1319.51

Insurance 100 86.89 92.38 182.23 192.76

Depreciation On Property Plant and Equipment 100 103.59 142.19 407.88 410.44

Other Expense 100 134.91 133.16 232.00 247.72

Cost of Good Sold 100 130.80 138.08 331.54 403.12

Opening Work In Process 100 23.80 76.78 67.63 56.07

Closing Work in Process 100 322.66 284.21 235.62 771.72

Total 100 -69.53 43.39 15.17 167.41

Cost Of goods Manufactured 100 121.15 133.52 316.31 375.64

Opening Stock Of finished goods 100 50.41 13.10 180.57 202.94

Closing Stock Of Finished Goods 100 25.98 358.17 402.55 1283.73

Total 100 75.26 132.49 45.13 895.90

Less: Own Consumption Capitalized 0 0.00 0.00 72.82 35.42

Cost Of Sales 100 119.88 131.73 316.16 371.04

Gross Profit 100 203.35 104.27 98.28 291.45

Administrative Expense 100 -159.46 136.20 146.00 185.48

Selling and Distribution Expense 100 -56.40 106.92 921.87 3072.85

Other Operating Expense 100 -204.56 148.98 620.47 848.59

Other Operating Income 100 41.56 67.74 119.73 108.82

Impairment On Investment 0 0.00 0.00 0.00 0.00

Profit Operations 100 161.17 90.81 62.16 139.50

Finance Cost 100 148.24 153.85 575.53 857.24

Shares of Loss of Associated Co. 0 0.00 0.00 0.00 0.00

Profit/Loss Before Tax 100 162.57 81.11 -11.83 36.62

Taxation 100 234.54 22.31 -45.01 57.22

Profit /Loss For Year 100 143.78 96.46 -3.16 31.23

Earning/Loss per Share 100 113.71 70.50 2.30 21.49

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Financial Analysis of D.G Khan Cement Company Ltd.

DG Cement

Horizontal analysis of Income statement As a base year 2005.

Interpretation for Accounts:

Sales:

Since the computed value of sales under Horizontal Analysis taking year 2005 as base is
showing increasing trend till year 2009 .Moreover, the value of sales increase in year 2009 is
quite significant. The overall tendency of the sales in the last five years is increasing.

Cost of Sales:

Raw Materials:

Since the computed value of Raw Material under Horizontal Analysis taking year 2005 as
base is showing increasing (Significantly) trend till year 2009.. Moreover, the value of
increase in Raw Material in year 2009 is quite significant. The overall tendency of the Raw
Material in the last five years is increasing.

Salaries and Wages:

Since the computed value of Salaries and Wages under Horizontal Analysis taking year
2005 as base is showing increasing (Significantly) trend till year 2009.. Moreover, the value
of increase in Salaries and Wages in year 2008 and 2009 is quite significant. The overall
tendency of the Salaries and Wages in the last five years is increasing.

Electricity cost

Since the computed value of electricity under Horizontal Analysis taking year 2005 as base
is showing increasing (Significantly) trend till year 2009. However, the electricity volume has
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Financial Analysis of D.G Khan Cement Company Ltd.

shown significant increasing in years 2008. The overall tendency of the electricity in the last
five years is increasing.

Furnace oil cost

Since the computed value of furnace oil under Horizontal Analysis taking year 2005 as base
is showing increasing {Significantly) in year 2006. However, the cost has shown decreasing
trend in years 2007. Moreover, the value of increase in year 2008 and 2009 is quite
significant. The overall tendency of the sales in the last five years is increasing.

Store and spare consume:

Since the computed value of store and spare consume under Horizontal Analysis taking year
2005 as base is showing increasing (Significantly) trend in year 2006 to 2009. Moreover, the
value of increase in sales in year 2008 and 2009 is quite significant. The overall tendency of
the store and spare consume in the last five years is increasing.

Repair and maintenance cost:

Since the computed value of repair and maintenance cost under Horizontal Analysis taking
year 2005 as base is showing increasing (Significantly) trend till year 2009.. Moreover, the
value of increase in year 2009 is quite significant. The overall tendency of the repairing and
maintenance cost in the last five years is increasing.

Furnace Oil /Coal:

Since the computed value of Furnace oil/coal under Horizontal Analysis taking year 2005 as
base is showing increasing trend till year 2009. Moreover, the value of increase in year 2009
is quite significant. The overall tendency of the repairing and maintenance cost in the last
five years is increasing.

Insurance:

Since the computed value of insurance under Horizontal Analysis taking year 2005 as base
is showing decreasing (Significantly) trend in year 2006 and 2007. However, the sales

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Financial Analysis of D.G Khan Cement Company Ltd.

volume has shown increasing trend years subsequent to year 2009. Moreover, the value of
increase in insurance in year 2009 is quite significant. The overall tendency of the
insurances in the last two years is increasing.

Depreciation on Property, Plant and Equipment:

Since the computed value of depriciati0n on property, plant and equipment under Horizontal
Analysis taking year 2005 as base is showing increasing (Significantly) trend till 2009 . The
overall tendency of the depreciation on lease asset in the last five years is increasing.

Other expenses:

Since the computed value of other expenses under Horizontal Analysis taking year 2005 as
base is showing increasing (Significantly) trend till year 2009.. Moreover, the value is
increase in year 2009 is quite significant. The overall tendency of the other expenses in the
last five years is increasing.

Opening work in process:

Since the computed value of opening work in process under Horizontal Analysis taking year
2005 as base is showing continuous decrease till 2009. Overall trend of volume is
decreasing.

Closing work in process:

Since the computed value of closing work in process under Horizontal Analysis taking year
2005 as base is showing increasing (Significantly) trend till year 2009. Moreover, the value
of increase in sales in year 2009 is quite significant. The overall tendency of the closing work
in process in the last five years is increasing.

Cost of goods Manufactured:

Since the computed value of cost of goods manufactured charges under Horizontal Analysis
taking year 2005 as base is showing increasing (Significantly) trend till year 2009. Moreover,
the value is increase in year 2009 is quite significant.

Cost of Good Sold:

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Financial Analysis of D.G Khan Cement Company Ltd.

From the above computation hence it is observed that the value of cost of good sold is
increasing by 130.10%, 130.08%, 331.54%, and 403.12% in year 2006,2007,2008,2009
respectively as compared to the base year 2005.

Opening finished goods:

Since the computed value of opening finished goods under Horizontal Analysis taking year
2005 as base is showing decreasing (Significantly) trend till year 2007. However, the sales
volume has shown increasing trend years subsequent to year 2009. Moreover, the value of
increase in opening finished goods in year 2009is quite significant. The overall tendency of
the opening finished goods in the last two years is increasing.

Closing finished goods:

Since the computed value of closing finished goods under Horizontal Analysis taking year
2005 as base is showing decreasing (Significantly) trend in year 2006. However, the closing
stock of finished goods has shown increasing trend years subsequent to year 2009.
Moreover, the value of increase in year 2009 is quite significant. The overall tendency of the
closing finished goods in the last three years is increasing.

Cost of goods sold:

Since the computed value of CGS under Horizontal Analysis taking year 2005 as base is
showing increasing (Significantly) trend till year 2009. Moreover, the value of increase in
CGS in year 2009 is quite significant. The overall tendency of the CGS in the last five years
is increasing.

Gross profit:

Since the computed value of gross profit under Horizontal Analysis taking year 2005 as base
is showing increasing (Significantly) trend in year 2006, 2007 and 2009. However, the gross
profit volume has shown decreasing trend in year 2008. Moreover, the value of increase in
gross profit in year 2009 is quite significant. The overall tendency of the gross profit is
increasing

Operating expenses:

Administrative expenses:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of administrative expenses under Horizontal Analysis taking year
2005 as base is decreasing in year 2006. However, the administrative expenses volume has
shown increasing trend till year 2009. Moreover, the value of administrative expenses
increase in year 2009 is quite significant. The overall tendency of administrative the in the
last five years is increasing.

Selling and distribution expense:

Since the computed value of selling and distribution expense under Horizontal Analysis
.taking year 2005 as base is showing decreasing (Significantly) trend in year 2006.
However, the volume of selling and distribution has shown increase trend years subsequent
to year 2009. Moreover, the value of increase in selling and distribution in year 2009 is quite
significant. The overall tendency of the selling and distribution in the last five years is
increasing.

Other Operating Expense:

Since the computed value of other operating expenses under Horizontal Analysis taking
year 2005 as a base is showing increasing trend till 2009. The overall tendency of other
operating expenses in last five year is increasing.

Other Operating Income:

Since the computed value of other operating Income under Horizontal Analysis taking year
2005 as base is showing decreasing (Significantly) trend in year 2006 and 2007. However,
the volume of selling and distribution has shown increase trend years subsequent to year
2009. Moreover, the value of other operating income is increase in year 2008 is quite
significant. The overall tendency of the operating income in the last five years is fluctuation.

Impairment on Investment:

Since the computed value of impairment on investment under Horizontal Analysis taking
year 2005 as base is showing decreasing (Significantly) trend in year 2007 and 2008.
However, the volume of impairment on investment has shown increasing trend years 2006
and 2009. The overall tendency of the impairment on investment in the last five years is
fluctuation.

Total finance cost:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of total finance cost under Horizontal Analysis taking year 2005
as base is showing increasing (Significantly) trend till year 2009. However, the overall
tendency of the total finance cost in the last five years is increasing.

PROFIT BEFOFE TAXATION:

Since the computed value of profit before taxation under Horizontal Analysis taking year
2005 as base is showing increasing (Significantly) in year 2006. However, the volume has
shown decreasing trend in years subsequent to year 2009. The overall tendency of profit
before taxation the in the last three years is decreasing.

TAXATION:

Since the computed value of taxation under Horizontal Analysis taking year 2005 as base
is increase in year 2006 and decreasing trend till 2009. The overall tendency of taxation the
in the last three years is decreasing.

PROFIT FOR THE YEAR:

Since the computed value of profit for the year under Horizontal Analysis taking year 2005
as base is showing increasing (Significantly) in year 2006. However, the volume has shown
decreasing trend in years subsequent to year 2009. The overall tendency of profit for the
year is decreasing.

Earning/Loss per Share:

Since the computed value of earning/loss per share for the year under Horizontal Analysis
taking year 2005 as base is showing increasing (Significantly) in year 2006. However, the
volume has shown decreasing trend in years subsequent to year 2009. The overall tendency
of earning/loss per share for the last three year is decreasing.

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Financial Analysis of D.G Khan Cement Company Ltd.

D.G Cement

Income Statement Vertical Analysis Taking sales as base

2005 2006 2007 2008 2009


Description
% % % % %

Sales Net 100.00 100.00 100.00 100.00 100.00

Cost Of Sales - - - - -

Raw and Packing Material Consumed 7.09 5.83 9.05 11.10 8.47

Salaries, Wages, and Other Benefits 3.52 2.90 4.58 3.85 3.56

Electricity and Gas 6.12 5.92 9.43 13.22 7.91

Furnace Oil /Coal 28.29 26.58 29.64 36.93 36.61

Stores and Spare Consumed 6.78 4.88 5.97 6.12 4.88

Repair and Maintenance 0.19 0.23 0.36 0.79 0.73

Insurance 0.45 0.26 0.34 0.35 0.25

Depreciation On Property Plant and


6.25 4.30 7.31 10.82 7.51
Equipment

Other Expense 1.50 1.34 1.64 1.48 1.09

Cost of good sale 60.18 52.24 68.34 84.64 71.01

Opening Work In Process 4.00 0.63 2.52 1.15 0.66

Closing Work-In Process (0.95) (2.04) (2.22) (0.95) (2.15)

0 3.05 (1.41) 1.09 0.20 1.49

Cost Of Goods Manufactured 63.23 50.83 69.43 84.84 69.52

Opening Stock Of Finished Goods 0.73 0.24 0.08 - 0.43

Closing Stock Of Finished Goods (0.37) (0.06) (1.09) (0.63) (1.39)

0 0.36 0.18 0.40 0.07 0.95

LESS: Own Consumption Capitalized 0.50 0.83 0.69 0.16 0.05

Cost Of Sales 63.09 50.19 68.35 84.61 68.51

Gross Profit 36.91 49.81 31.65 15.39 31.49

Administrative Expense (1.45) 1.53 (1.62) (0.90) (0.79)

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Financial Analysis of D.G Khan Cement Company Ltd.

Selling and Distribution Expense (1.15) 0.43 (1.01) (4.51) (10.38)

Other Operating Expense (1.78) 2.41 (2.18) (4.68) (4.41)

Other Operating Income 13.40 3.70 7.47 6.81 4.27

Impairment On Investment - - - - (1.43)

Profit From Operations 45.94 49.13 34.31 12.11 18.76

Finance Cost (5.76) (5.67) (7.29) (14.06) (14.45)

Shares Of Loss Of Associated Co. - (0.12) (0.22) (0.07) -

Profit/Loss Before Tax 40.18 43.35 26.80 (2.02) 4.31

Taxation (8.32) - (1.53) 1.59 (1.39)

Profit /Loss For Year 31.86 30.40 25.27 100.00 2.91

Earning/Loss Per Share 0.00 0.00 0.00 0.00 0.00

VERTICLE ANALYSIS

SALES:

Since the computed value of sales under vertical Analysis taking net sales as base is
showing similar trend over the years.

Cost of Sales

Raw Materials:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Raw Material under vertical Analysis taking net sales as base is
showing decrease in 2006 However, there is significant increase in Raw Materials in 2007,
2008 & 2009. The overall tendency of the Raw Material in the last five years is fluctuating.

Salaries and Wages:

Since the computed value of Salaries and Wages under vertical Analysis taking net sales as
base is showing decrease trend in 2006. However, the Salaries and Wages volume has
shown increasing trend in year 2007 & 2008. Moreover, the value of Salaries and Wages
decrease in year 2009. The overall tendency of the Salaries and Wages in the last five years
is fluctuating.

Electricity cost

Since the computed value of electricity under vertical Analysis taking net sales as base is
showing a decrease in year 2006. However, the electricity volume has shown increase in
years 2007 to 2008.While it decrease in 2009.The overall tendency of the electricity in the
last five years is fluctuating.

Furnace oil cost

Since the computed value of furnace oil under vertical Analysis taking net sales as base is
showing a decrease in year 2006. However, the electricity volume has shown a continuous
increase in years 2007 to 2008, but it shows a slightly decrease in year 2009.The overall
tendency of the sales in the last five years is fluctuating.

Store and spare consume:

Since the computed value of store and spare consume under vertical Analysis taking net
sales as base is showing a decrease in year 2006. However, the store and spare consume
has shown a continuous increase in years 2007 to 2008, but it shows a decrease in year
2009.The overall tendency of the store and spare consume in the last five years is
fluctuating.

Repair and maintenance cost:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of repair and maintenance cost under vertical Analysis taking net
sales as base is showing an increase in year 2006 to 2009. The overall tendency of the
repairing and maintenance cost in the last five years is increasing.

Insurance:

Since the computed value of insurance under vertical Analysis taking net sales as base is
showing decrease in year 2006. However, the Insurance tends to increase in year2007 and
it also shows a slightly increase in year 2008. Moreover, the value of insurance in year 2009
is decreased. The overall tendency of the insurances in the last five years is fluctuating.

Depreciation on leased assets:

Since the computed value of depriciati0n on lease asset under vertical Analysis taking net
sales as base is showing a decrease in year 2006, but the depreciation on lease asset
volume has shown a slightly increase in year 2007. Moreover, the value of Depreciation on
leased assets has shown a continuous increase in years 2008 to 2009. The overall tendency
of the depreciation on lease asset in the last five years is fluctuating.

Other expenses:

Since the computed value of other expenses under vertical Analysis taking net sales as
base is showing a decrease in year 2006. Then the value of other expenses shows an
increase in year 2007. However, it shows a continuous decrease in the years 2008 to 2009.
The overall tendency of the other expenses in the last five years is fluctuating.

Opening work in process:

Since the computed value of opening work in process under vertical Analysis taking net
sales base is showing a decrease in year 2006 to 2009. The overall tendency of Opening
work in process in the last five years is decreasing.

Closing work in process:

Since the computed value of closing work in process under vertical Analysis taking net sales
as base is showing an increase in the years 2006 to 2007. Then the value of closing work in

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Financial Analysis of D.G Khan Cement Company Ltd.

process tends to decrease in year 2008. However, it shows an increase in year 2009.The
overall tendency of the closing work in process in the last five years is fluctuating.

Cost of goods Manufactured:

Since the computed value of cost of goods manufactured charges under vertical Analysis
taking net sales as base is showing a decrease in year 2006.Then the value of cost of goods
manufactured is showing an increasing trend in year 2007 to 2009. The overall tendency of
the cost of goods manufactured in the last five years is fluctuating.

Opening finished goods:

Since the computed value of opening finished goods under vertical Analysis taking net

Sales as base are showing a decreasing trend in years 2006 to 2009. The overall

Tendency of the opening finished goods in the last five years is decreasing.

Closing finished goods:

Since the computed value of closing finished goods under vertical Analysis taking net sales
as base is showing a decrease in year 2006. However, the closing stock of finished goods
has shown an increase in year 2007, but it tends to decrease in year 2008.Moreover, the
value closing stock of finished goods is increased in year 2009. The overall tendency of the
closing stock of finished goods in the last five years is fluctuating.

Overhead Cost:

Since the computed value of overhead cost under vertical Analysis taking net sales as base
is showing decrease (Significantly) trend in year 2006. However, the overhead cost has
shown increasing trend years subsequent to year 2008. Moreover, the value of over head
cost decrease in year 2009 is quite significant. The overall tendency of the sales in the last
five years is fluctuating

Cost of goods sold:

Since the computed value of cost of goods sold under vertical Analysis taking net sales as
base is showing decrease in year 2006. However, the cost of goods sold volume has shown
increasing trend in year 2007 to year 2009. The overall tendency of the cost of goods sold in
the last five years is fluctuating.

Gross Profit:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of gross profit under vertical Analysis taking net sales as base is
showing increase in year 2006. However, the gross profit has shown decreasing trend in
year 2007 & 2009. The overall tendency of the gross profit in the last five years is fluctuating.

Administrative Expense:

Since the computed value of Administrative Expense under vertical Analysis taking net sales
as base is showing increase in year 2006 & 2007. However, the Administrative Expense has
shown decreasing trend in year 2008 & 2009. The overall tendency of the administrative
expense in the last five years is fluctuating

Selling and distribution expenses:

Since the computed value of Selling and distribution expenses under vertical Analysis taking
net sales as base is showing decrease in year 2006 and 2007. Moreover, the value of
Selling and distribution expenses has significant increase in year 2008 & 2009. The overall
tendency of the Selling and distribution expenses in the last five years is fluctuating.

OTHER OPERATING EXPENSE:

Since the computed value of OTHER OPERATING Expense under vertical Analysis taking
net sales as base is showing increase in year 2006. However, the OTHER OPERATING
EXPENSE has shown slightly decrease trend in year 2007. Moreover, the value of OTHER
OPERATING EXPENSE has increase in year 2008 but a slightly decrease in year 2009. The
overall tendency of the other operating expense in the last five years is fluctuating.

OTHER OPERATING INCOME:

Since the computed value of other operating income under vertical Analysis taking net sales
as base is showing significantly decrease in year 2006. However, the other operating
income has shown increasing trend in year 2007. Moreover, the value of other operating
income has decrease in year 2008 & 2009. The overall tendency of the other operating
income in the last five years is fluctuating.

Impairment on investment:

Taking net sales as a base year there is no expense on impairment on investment in any
year except in year 2009

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Financial Analysis of D.G Khan Cement Company Ltd.

Profit from operations:

Since the computed value of profit from operations under vertical Analysis taking net sales
as base is showing decrease in year2006 to 2009. The overall tendency of the profit from
operations in the last five years is decreasing.

Finance Cost:

Since the computed value of finance cost under vertical Analysis taking net sales as base is
showing slightly decrease in year 2006. However, the finance cost has shown continuous
increase till 2009. The overall tendency of the finance cost in the last three years is
increasing.

Share of loss of associated companies:

Since the computed value of share of loss of associated companies under vertical
Analysis taking net sales as base is showing increase in year 2006 & 2007.
However, the share of loss of associated companies has shown decrease in 2008.
The overall tendency of the share of loss of associated companies in the last five
years is fluctuating.

Profit/loss before tax:

Since the computed value of profit/ loss before tax under vertical Analysis taking
net sales as base is showing increase in year 2006. However, it has shown
decreasing trend in 2007 to 2009. The overall tendency of profit/ loss before tax
in the last five years is fluctuating.

Taxation:

Since the computed value of taxation under vertical Analysis taking net sales as base is
showing negatively decreasing in year 2006 & 2007. However, the taxation has shown
positive increase in 2008 and negatively decreases in 2009. The overall tendency of the
taxation in the last five years is fluctuating.

Profit for the year:

Since the computed value of profit for the year under vertical Analysis taking net sales as
base is show decreasing in year 2006 & 2007. However, the profit for the year has shown

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Financial Analysis of D.G Khan Cement Company Ltd.

increase in 2008. Moreover it show decrease in 2009. The overall tendency of the profit for
the year in the last five years is fluctuating.

DG cement.
Cash Flow statement.
Horizontal Analysis.
Years.
2005 2006 2007 2008 2009
% % % % %

Cash flow from operating activities.

Cash generated from operations. 100 161.6 36.01 45.64 138.34


Finance cost paid. 100 104.3 194.58 720.9 1018.1
Retirement and other benefits paid. 100 439.2 2498.0 293.1 402.20
Tax paid. 100 77.44 141.53 332.7 577.53
Net(decrease)/increase in long term deposits. 100 -303.9 -2699.7 329.8 7.39

Net cash from operating activities. 100 168.6 19.14 -24.55 46.20

Cash flow from investing activities.

Purchase of equipment, plant and property. 100 243.0 137.50 72.82 53.85
Purchase of investment. 100 86.31 165.83 97.31 20.09
Sale proceeds of investment. 100
Net(increase)/decrease of long term loan,advances and
26.13 -56.37 132.1 -144.52
deposits. 100
Sale proceeds of property,plant and equipment. 100 300.4 429.05 614.6 93.98
Dividend received. 100 169.3 296.67 522.5 450.46
Interest received. 100

Net cash used in investing activities. 100 224.3 120.20 59.15 23.21

Cash flow from financing activities.


Proceeds from issuance of share capital. 100
Share capital deposit money received. 100 0
Repayment of non particepatory redeemable capital 100 137.9 0 0 0
Proceeds from long term loans. 100 118.1 114.92 103.4 10.34
Repayment of long term loans. 100 140.8 314.22 674.1 634.18
Repayment of finance lease liabilities. 100 109.8 125.30 29.10 1.66
Dividend paid. 100 137.51 151.2 0.21

Net cash from/(used in) financing activities. 100 161.2 158.34 -30.23 -87.84

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Financial Analysis of D.G Khan Cement Company Ltd.

Net increase/(decrease) in cash and cash equivalent. 100 -407.3 -314.78 -864.5 -354.74
Cash and cash equivalent at the beginning of the year. 100 67.89 198.68 299.7 577.33

Cash and cash equivalent at the end of the year. 100 292.6 441.49 850.3 1018.1

DG Cement,

Horizontal analysis of cash flow statement:

Cash flow from operating activates

Cash flow from operation:

Since the computed value of cash flow from operation under Horizontal Analysis taking year
2005 as base is showing increasing trend in year 2006. However, the cash flow from
operation volume has shown decreasing trend in years subsequent to year 2007 and 2008.
Moreover, the value of cash flows from operation is increase in year 2009. The overall
tendency of the cash flow from operation in the last five years is flu

Finance cost paid:

Since the computed value of finance cost paid under Horizontal Analysis taking year 2005
as base is showing increasing trend up till 2009. So, the over all tendency of finance cost
paid is increasing.

Retirement and other benefits paid:

Since the computed value of retirement and other benefits paid under Horizontal Analysis
taking year 2005 as base has shown increasing trend in years subsequent to year 2009.

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Financial Analysis of D.G Khan Cement Company Ltd.

Moreover, the value of increase in taxes paid in year 2006 is quite significant. The overall
tendency of the taxes paid in the last five years is increasing.

Taxes paid:

Since the computed value of taxes paid under Horizontal Analysis taking year 2005 as base
is showing decreasing trend in year 2006. However, the cash flow from operation volume
has shown increasing trend in years subsequent to year 2009. Moreover, the value of
increase in taxes paid in year 2009 is quite significant. The overall tendency of the taxes
paid in the last five years is increasing.

Net cash from operating activities:

Since the computed value of net cash flow from operating activities under Horizontal
Analysis taking year 2005 as base is showing decreasing trend till year 2007. However, the
net cash flow from operating activities volume has shown increasing trend in years
subsequent to year 2008. Moreover, the value of decrease in net cash flows from operating
activities in year 2009. The overall tendency of the net cash flow from operating activities in
the last five years is fluctuating.

Cash flows from investing activities:

Purchase of property, plant and equipment:

Since the computed value of Purchase of property, plant and equipment under Horizontal
Analysis taking year 2005 as base is showing increasing (Significantly) trend in year 2007.
However, the purchase of property, plant and equipment volume has shown decreasing
trend in years subsequent to year 2009. Moreover, the value of increase in purchase of
property, plant and equipment in year 2006 is quite significant. The overall tendency of the
purchase of property, plant and equipment in the last five years is decreasing.

Purchase of investments:

Since the computed value of purchase of investment under Horizontal Analysis taking year
2005 as base is showing decreasing trend till year 2006. However, the purchase of
investment volume has shown increasing trend in years subsequent to year 2007. Moreover,
National University Of Modern Languages Page 42
Financial Analysis of D.G Khan Cement Company Ltd.

the value of decrease in purchase of investment activities to year 2009 is quite significant.
The overall tendency of the purchase of investment in the last five years is fluctuating.

Net (increase)/decrease of long term loan, advances and deposits:

Since the computed value of net long term loan, advances and deposits under Horizontal
Analysis taking year 2005 as base is showing decreasing trend till 2007.. Moreover, the
value of net long term loan, advances and deposits is increase year 2008. It again
decreases in 2009. The overall tendency of the finance cost in the last five years is
fluctuating.

Sale proceeds of property, plant and equipment:

Since the computed value of sale proceeds of property, plant and equipment under
Horizontal Analysis taking year 2005 as base is showing increasing trend till year 2008.
Moreover, the value of sale proceeds of property, plant and equipment is decrease in year
2009. The overall tendency of the finance cost in the last five years is fluctuating.

Dividend received:

Since the computed value of dividend received under Horizontal Analysis taking year 2005
as base is showing increasing trend till year 2009. Moreover, the value of increase in finance
cost in year 2009 is quite significant. The overall tendency of the finance cost in the last five
years is increasing.

Precedes from long term loans:

Since the computed value of proceed from long term loans under Horizontal Analysis taking
year 2005 as base is showing increasing trend till year 2008. Moreover, the value of proceed
from long term loans is decrease in year 2009. The overall tendency of the finance cost in
the last five years is fluctuating.

Repayment of long term loans:

Since the computed value of repayment of long term loans under Horizontal Analysis taking
year 2005 as base is showing increasing trend till year 2009. Moreover, the value of
repayment of long term loans increase in year 2008 is quite significant. The overall tendency
of the finance cost in the last five years is increasing.

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Financial Analysis of D.G Khan Cement Company Ltd.

Repayment of finance lease liabilities:

Since the computed value of repayment of finance lease liabilities under Horizontal Analysis
taking year 2005 as base is showing increasing trend till year 2007. However, the value of
repayment of finance lease liabilities decrease till 2009. The overall tendency of the finance
cost in the last five years is fluctuating.

Dividend paid:

From the above computation hence it can be observed that the value of dividend paid is
increases 137.5094234%, 151.2107856% afterward it decrease 0.212600467% as
compared to the base year 2005.

Net increase/ (decrease) in cash and cash equivalent:

Since the computed value of net cash and cash equivalent under Horizontal Analysis taking
year 2005 as base is showing decreasing trend till year 2009. The overall tendency of the
finance cost in the last five years is decreasing.

Cash and cash equivalent at the beginning of the year:

Since the computed value of cash and cash equivalent under Horizontal Analysis taking year
2005 as base is showing increasing trend till year 2009. Moreover, the value of increase in
finance cost in year 2009 is quite significant. The overall tendency of the finance cost in the
last five years is increasing.

DG. Cement.
Cash flow statement.
Vertical analysis.
Years.
2005 2006 2007 2008 2009
Cash flow from operating activities. % % % % %

Cash generated from operations. -319 -176 -26 -17 -43.4


Finance cost paid. 27.64 9.86 12.18 23.4 27.6
Retirement and other benefits paid. 0.20 0.30 1.13 0.07 0.08
Tax paid. 4.71 1.25 1.51 1.84 2.67

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Financial Analysis of D.G Khan Cement Company Ltd.

Net(decrease)/increase in long term deposits. 0.20 -0.20 -1.19 0.08 0.00

Net cash from operating activities. -286 -165 -12 8.28 -13.0

Cash flow from investing activities.

Purchase of equipment, plant and property. 427.5 355.0 133.1 36.6 22.6
Purchase of investment. 22.33 6.59 8.39 2.56 0.44
Sale proceeds of investment. 0.00 -0.51 0.00 0.00 0.00
Net(increase)/decrease of long term loan,advances and
28.43 2.54 -3.63 4.42 -4.04
deposits.
Sale proceeds of property,plant and equipment. -0.50 -0.51 -0.49 -0.36 -0.05
- -
-12.1 -11.1 -8.01
Dividend received. 18.11 10.48
Interest received. 0.00 -0.20 -0.10 -0.11 -0.48

Net cash used in investing activities. 459 352 125 31 10

Cash flow from financing activities.

Proceeds from issuance of share capital. 0 0 -41.8 0 -11.4


Share capital deposit money received. 0 -0.33 0.00 0 0.00
Repayment of non particepatory redeemable capital 23.06 0.00 0.00 0 0.00
Proceeds from long term loans. -334 -157 -87.0 -40.7 -3.40
Repayment of long term loans. 54.39 21.95 38.7 43.1 33.8
Repayment of finance lease liabilities. 7.91 3.81 2.25 0.27 0.01
Dividend paid. 28.92 10.86 9.01 5.14 0.01

Net cash from/(used in) financing activities. -220 -121 -79.0 7.83 19.0

Net increase/(decrease) in cash and cash equivalent. -47.2 65.83 33.72 48.08 16.48
Cash and cash equivalent at the beginning of the year. 147.2 34.17 66.28 51.92 83.52

Cash and cash equivalent at the end of the year. 100 100 100 100 100

DG. Cement.

Cash flow statement vertical analysis Years 2005 to2009

Cash flow from operating activities

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Financial Analysis of D.G Khan Cement Company Ltd.

Cash flows from operations:

Since the computed value of Cash flows from operations under vertical Analysis taking Net
cash as base shows a significant decrease in year 2006 and also in 2007, and also it shows
an increasing trend in year 2008 and 2009. The overall tendency of Cash flows from
operations in the last five years shows fluctuating.

Finance cost paid:

Since the computed value of Finance cost paid under vertical Analysis taking Net cash as
base is showing an decrease in year 2006 again increase in 2007 subsequent years till
2009. The overall tendency of Finance cost paid in the last five years is fluctuating.

Retirement and other benefits paid:

Since the computed value of Retirement and other benefits under vertical Analysis taking
Net cash as base are slightly increased in year 2006.It also shows an decreasing trend in
year 2007.Then it tends to increase in 2008.However, it tends to increase in a little bit trend.
The overall tendency of Retirement and other benefits in the last five years is fluctuating.

Taxes paid:

Since the computed value of taxes paid under vertical Analysis taking Net cash as base are
decreased in years 2006,then it shows an increasing trend till 2009. The overall tendency
of taxes paid in the last five years is fluctuating.

Net (decrease)/increase in long term deposits:

Since the computed value of Net (decrease)/increase in long term deposits under vertical
Analysis taking Net cash as base shows a slightly increase in year 2005. It also shows a
decreasing trend in year 2006 to 2007. Then it tends to increased in year 2009. The overall
tendency of Net (decrease)/increase in long term in the last five years are fluctuating

Net cash from operating activities:

Since the computed value of Net cash from operating activities under vertical Analysis taking
Net cash as base, shows a significant decreasing trend in 2005 to 2007. Then it show
increasing in year 2008. However, it shows decrease in year 2009. The overall tendency of
Net cash from operating activities in the last five years is fluctuating.

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Financial Analysis of D.G Khan Cement Company Ltd.

Cash flows from investing activities

Purchase of property, plant and equipment:

Since the computed value of Purchase of Property, Plant and Equipment under vertical
Analysis taking Net cash as base, shows a increasing trend in 2005 to 2007. Then it shows
a significant decrease trend in year 2008 to 2009. The overall tendency of Purchase of
Property, Plant and Equipment in the last five years is fluctuating.

Purchase of investments:

Since the computed value of Purchase of Investment under vertical Analysis taking Net cash
as base, shows a significant decrease in year 2006 and then tends to increase in
2007.However, it tends to decrease in year 2008 to 2009.The overall tendency of Purchase
of Investment in the last five years is fluctuating.

Sale proceeds of investments:

Since the computed value of Sale proceeds of investments under vertical Analysis taking
Net cash as base, shows a decrease in year 2006 .As there is no account of Sale proceeds
of investments in year 2008 to 2009.The overall tendency of Sale proceeds of investments in
the last five years is decreasing.

Net (increase)/decrease in long term loans and deposits:

Since the computed value of Net (increase)/decrease in long term loans and deposits under
vertical Analysis taking Net cash as base, shows a significant decrease in year 2006 and
then tends to decrease in year 2007 while increase in year 2008.Moreover, it shows a
decrease in year 2009.The overall tendency of Net (increase)/decrease in long term loans
and deposits in the last five years is fluctuating.

Sales proceeds of property, plant and equipment:

Since the computed value of Sales proceeds of property, plant and equipment under vertical
Analysis taking Net cash as base, shows a continuous decrease in year 2006 to 2009.The
overall tendency of Sales proceeds of property, plant and equipment in the last five years is
fluctuating.

Dividend received:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Dividend received under vertical Analysis taking Net cash as
base, shows a continuous decrease in year 2006 to 2009.The overall tendency of Dividend
received in the last five years is decreasing.

Interest received:

Since the computed value of Interest received under vertical Analysis taking Net cash as
base, as there is no account of Interest received in year 2005 but it sows a decrease in year
2007 to 2009.The overall tendency of Interest received in the last five years is decreasing.

Net cash used in investing activities:

Since the computed value of Net cash used in investing activities under vertical Analysis
taking Net cash as base is showing a significant decrease in subsequent years till
2009.So,the overall tendency of Interest received in the last five years is decreasing.

Cash flows from financing activities

Repayment of non-participatory redeemable capital:

As there is no account of Repayment of non-participatory redeemable capital except year


2005.So there is no interpretation.

Proceeds from issuance of share capital:

Since the computed value of Proceeds from issuance of share capital under vertical
Analysis taking Net cash as base, has no account in years 2005 to 2006, but it has the
account in years2007&2009. It shows a decreasing trend. The overall tendency of Interest
received in the last five years is decreasing.

Share capital deposit money received:

As there is no account of share capital deposit money received, so there is no interpretation


for it.

Proceeds from long term loans:

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Financial Analysis of D.G Khan Cement Company Ltd.

Since the computed value of Proceeds from long term loans under vertical Analysis taking
Net cash as base is showing a significant decrease over the years till 2009.So, the overall
tendency of Proceeds from long term loans received in the last five years is decreasing;

Repayment of long term loans:

Since the computed value of Repayment of long term loans under vertical Analysis taking
Net cash as base is showing a decrease in year 2006.It tends to increase in year 2007 and
2008. Then it shows decrease in year 2009.The overall tendency of Repayment of long term
loans received in the last five years is fluctuating

Repayment of finance lease liabilities:

Since the computed value of Repayment of finance lease liabilities under vertical Analysis
taking Net cash as base is showing a continuous decrease over the years till year 2009. The
overall tendency of Repayment of finance lease liabilities received in the last five years is
decreasing.

Dividend paid:

Since the computed value of Dividend paid under vertical Analysis taking Net cash as base
is showing a continuous decrease over the years till year 2009. The overall tendency of
Dividend paid received in the last five years is decreasing.

Net cash from/ (used in) financing activities:

Since the computed value of Net cash from/ (used in) financing activities under vertical
Analysis taking Net cash as base is showing a significant decrease in the years 2006 and
2007. Then it tends to increase in years 2008 and 2009.The overall tendency of Net cash
from/ (used in) financing activities received in the last five years is fluctuating.

Net increase/ (decrease) in cash and cash equivalents:

Since the computed value of Net increase/ (decrease) in cash equivalents under vertical
Analysis taking Net cash as base is showing an increase in the year 2006. Then it
decreased in year 2007.It tends to increase in year 2008. Then it is decreased in year
2009.The overall tendency of Net increase/(decrease) in cash equivalents received in the
last five years is fluctuating.

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Financial Analysis of D.G Khan Cement Company Ltd.

Cash and cash equivalents at the beginning of year:

Since the computed value of Cash and cash equivalents at the beginning of the year under
vertical Analysis taking Net cash as base is showing a significant decrease in the year 2006.
Then it is increased in year 2007.it shows a decrease in year 2008. Moreover it tends to
increase in year 2009.The overall tendency of Cash and cash equivalents at the beginning
of the year received in the last five years is fluctuating.

Cash and cash equivalents at the end of year:

Since the computed value of Cash and cash equivalents at the end of the year under vertical
Analysis taking Net cash as base is same over the years till 2009. The overall tendency of
Cash and cash equivalents at the end of the year received in the last five years is constant.

Repayment of long term loans:

Since the computed value of Proceeds from long term loans under vertical Analysis taking
Net cash as base is showing a significant decrease over the years till 2009.So, the overall
tendency of Interest received in the last five years is decreasing.

1. Current Ratio’s

1. Current Ratio's

Formula. Current Ratio=Current Assets/current liabilities

Years
Items
2005 2006 2007 2008 2009
Current ratio. 1.373352 1.647411 2.6000485 1.5929523 0.8391387

Curre
ntra
tio.
3
2
.5
2
1
.5
Currentratio.
1
0
.5
0
2
005 2
006 2
007 2
008 2
009

Interpretation:

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Financial Analysis of D.G Khan Cement Company Ltd.

The current ratio is the ratio of total current assets and total current liabilities. The
current ratio of a firm measures its short-term solvency, i.e. its ability to meet short-
term obligations. As a measure of short term/current financial liquidity, it indicates the
rupees of current assets available for each rupee of current liability / obligation. The
higher the current ratio, the large the amount of rupees available per rupee of current
liability, the more the firm’s ability to meet current obligations and the greater the
safety of funds of short term creditors. The standard for current ratio is 2:1.As shown
above this ratio is more then one for first two years which is satisfactory. This ratio
was 1.3733 in 2005 and increase to 1.647 in 2006 and 2.600 in 2007 but in 2008 it is
decreased by1.592and in 2009 the ratio decreases to 0.839 which shows
Company’s ability to meet short-term obligations has reduced.

Quick ratio:

2. Quick Ratio's

Formula. Quick Ratio= {current assets-(inventory + prepaid expenses)} /current liabilities.

Years
Item
2005 2006 2007 2008 2009
Quick Ratio 0.94 1.47 2.32 1.35 0.58

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Financial Analysis of D.G Khan Cement Company Ltd.

Q
uic
kRa
tio
2
.5

1
.5
Quick
1 Ra
tio

0
.5

0
2
005 2
006 2
007 2
008 2
009

Interpretation:

The term current asset refers to the assets which can be converted into cash
immediately. Thus, the quick ratio = current assets–(inventory + prepaid
expense)/current liabilities. This ratio is used to check that how much inventory is
unsold and includes in current assets. Because current assets may include inventory
in large amount which would increase the current assets. from the above
computation it is observed that the value of quick ratio is 0.94 in year 2005 while it
has increased in the next two years by 1.47 and 2.32 in years 2006 and 2007
respectively.whlie it is observed that it has again decreased to 1.35 and 0.58 in year
2008 and 2009 respectively.

Net working Capital:

3. Net working capital.

Formula Net working capital=current assets-current liabilities.

Years
Item
2005 2006 2007 2008 2009
Net working
Capital. 1,140,911 3,894,459 11,824,725 7,147,873 -2,547,207

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Financial Analysis of D.G Khan Cement Company Ltd.

Net workingcapital.
15000000

10000000

5000000 Net working


capital.
0
2005 2006 2007 2008 2009
-5000000

Interpretation:

Working capital indicates the short run solvency position of the business. As from the
above computation it is observed that the net working capital is 1140911 in year
2005 while it has increased by 3894459, 11824725 in years 2006 and 2007
respectively. while it has decreased by 7147873 in year 2008 and it has shown a
negative trend in year 2009.which shows that the company’s current liabilities has
increased and it reflect that the company is unable to fulfill it financial requirements.

Solvency ratios:

Debt Ratio:

4. Debt Ratios
Formula. Debts ratio= Total liabilities / Total Assets.
Years.
Items
2005 2006 2007 2008 2009
Debts Ratio. 0.48280768 0.4383166 0.3444077 0.4214549 0.51037095

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Financial Analysis of D.G Khan Cement Company Ltd.

D
ebt
sRa
tio
.
0
.6
0
.5
0
.4
0
.3
D
ebtsRa
tio
.
0
.2
0
.1
0
2
005 2
006 2
007 2
008 2
009

Interpretation:

Debit ratio is calculated to check the total asset financed by the firm
creditors. It helps to determine how well creditors are protected in case of
insolvency. This ratio shows relation between total assets and total liabilities. From
the above computation hence it is observed that This ratio has shown a decreasing
trend in year 2006 and 2007 when compared to year 2005 while it has shown an
increasing trend in years 2008 and 2009.

Debt equity Ratio:

5. Debt-equity ratios
Formula Debt-equity ratio=Long term debt/total capitalization.
Years.
Items.
2005 2006 2007 2008 2009
Debt-equity ratio. 0.37716611 0.3188787 0.2351737 0.24683023 0.2220227

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Financial Analysis of D.G Khan Cement Company Ltd.

Debt-equity ratio.
0.4
0.3
0.2
Debt-equity ratio.
0.1
0
2005 2006 2007 2008 2009

Interpretation:

The debt equity ratio indicates the relationship between the long-term
funds provided by creditors and those provided by the firm’s owners. The standard
debt equity ratio is 60:40. From the above graph hence it is observed that the value
of debt equity ratio shows a decreasing trend in years 2006,2007,2008,2009.

Time interest earned ratio:

6. Time-interest -earned ratio.


Formula Time-interest -earned ratio=EBIT / Interest
Years.
Items. 2005 2006 2007 2008 2009
Time-interest-earned
ratio 7.97692416 8.6728127 4.7083926 0.8615551 1.29807878

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Financial Analysis of D.G Khan Cement Company Ltd.

Time-interest-earned ratio
10
8
6
4 Time-interest-earned ratio

2
0
2005 2006 2007 2008 2009

Interpretation:

This ratio is calculated to know about long- term solvency position of the business.
This ratio indicates the company’s ability to pay interest. From the above
computation it is observed that the ratio has shown an increasing trend in year 2005
and 2006 while it has decreased in year 2007 and 2008 which shows that the
company has not utilized its capital efficiently. While it has again shown an
increasing trend in year 2009.

Activity Ratios:

Account receivable turn over ratio:

7. Accounts Receivable turnover

Accounts Receivable turnover=Annual sale/Average account


Formula
receivable
Years.
Item. 2005 2006 2007 2008 2009
A/R. turnover. 69.25103 107.2698 44.505009 33.9893875 35.0961134

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Financial Analysis of D.G Khan Cement Company Ltd.

A/R.turnover.
150

100
50 A/R.turnover.

0
2005 2006 2007 2008 2009

Interpretation:

This ratio shows the proportion of sales to receivable. It means that how many times
in a year our receivables are collected. It shows the management of the company
that how much they are efficient to collect the receivables. From the above graph it is
observed that the ratio has increased in 2005 and 2006 while it has shown a
decreasing trend in the next three years which reflect that the company’s
management was unable to collect the receivables in the last three years.

Average collection period:

8. Average collection period.

Average collection period=No. of days in a year/Account Receivable


Formula.
turnover.
Years.
Items.
2005 2006 2007 2008 2009
Avg. collection 5.2 8.0 10.5 10.2
period 0 3.36 9 9 6

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Financial Analysis of D.G Khan Cement Company Ltd.

Avg. collection period


15

10

5 Avg. collection period

0
2005 2006 2007 2008 2009

Interpretation:

This ratio indicates that in how many days’ receivables are collected. The smaller the
answer is the better it is for the firm. So, from the above computation it is observed
that the average collection period is less in first two years which is good for the firm
but it has shown increasing trend in the next three years in 2007, 2008, 2009
respectively. This shows that collection management is inefficient.

Accounts payable turnover:

12. Account Payable turnover.

Formula. Account Payable turnover=Annual credit Purchase or CGS/ Avg.Account payable.

Years.
Item.
2005 2006 2007 2008 2009
Account payable
turnover 0 2.84 4.27 7.68 8.61

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Financial Analysis of D.G Khan Cement Company Ltd.

Accoun
tp a
yable
turn
o v
er
1
0

Account
5
payab
le
tu
rnov
er
0
2
005 2
006 2
007 2
008 2
009

Interpretation:

This ratio shows the portion of credit purchase to the accounts payable. It means
that how many times we have paid our creditors in one year. So from the above
computation it can be observed that it shows an increasing trend in five years. This
tells that the firm is improving its position.

Average payment Period:

13. Average Payment period.

Average Payment period=No. of days in a year/Account payable


Formula.
turnover

Years.
Items.
2005 2006 2007 2008 2009
Average Payment 0 126.85 84.29 46.85 41.81

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Financial Analysis of D.G Khan Cement Company Ltd.

period.

Interpretation:

Average payment period tells that after how many days the firm pays its
creditors.The greater the answer is the better it is for the firm .thus from the above
computation it can be observed that average payment period is 0 in year 2005.while
it has increased in year 2006 up to 126 days but again it has shown a decreasing
trend in the next three years. Which shows that the firm is .

Inventory turnover:

9. Inventory turnover.

Formula. Inventory turnover=CGS/Average inventory

Years.
Item.
2005 2006 2007 2008 2009
Inventory 2.9
Turnover. 3 3.76 2.45 3.84 3.22

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Financial Analysis of D.G Khan Cement Company Ltd.

InventoryTurnover.
5

3
Inv
en tory
2 Turnov er.
1

0
2005 2006 2007 2008 2009

Interpretation:

This ratio reveals the number of times finished stock is turned over
during a given accounting period. In other words this ratio indicates that how many
times in a year inventory can be converted into sales. High inventory turnover ratio is
better than a low ratio. According to graph above this ratio has increased from 2005
to 2006 but a slight decrease in 2007. In 2008 it has increased but in 2009 it has
decreased again.

Average age of inventory:

10. Average age of inventory.

Formula. Average age of inventory=No. of days in year/Inventory turnover.

Years.
Items.
2005 2006 2007 2008 2009
Avg. age of 122.7 95.7 146.9 93.8 111.7
inventory. 9 8 8 4 3

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Financial Analysis of D.G Khan Cement Company Ltd.

Avg.age of
Inventory.
200
150
100 Avg.age
of
50
inventory.
0
09
6
07

08
5

0
0

20
20

20
20
20

Interpretation:

This ratio shows us that for how many days the inventory remains
with the company after its conversion from raw material and work in process to
finished goods. The lower the days the higher the performance is for the firm. So,
from the above graph it can be observed that in 2005 inventory turnover in days is
122.79 than it decreased in 2006 to 95.78 and increased in 2007 up to 146.98 and in
2008 it has again decreased to 93.84while it has again increased to 111.73.

Total Asset turnover:

11. Total Asset Turnover.

Formula. Total Asset Turnover=Annual sales/Average total assets.

Total Asset
turnover. 0.2930402 0.231914 0.1240643 0.2393786 0.42221267

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Financial Analysis of D.G Khan Cement Company Ltd.

Tot
a lAsset
turnover.
0
.5
0
.4
0
.3
0
.2 Tota
l
Asset
0
.1
tu
rnover.
0
5

9
0

0
0

0
2

Gross Profit Margin:

14. Gross profit margin

Formula Gross profit margin=Gross profit/sales*100


Gross profit
margin 36.91199645 49.81158709 31.65270557 15.38866797 31.48721694

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Financial Analysis of D.G Khan Cement Company Ltd.

Grossprofitmargin
60
50
40
30 Gross profit
20 margin

10
0
2005 2006 2007 2008 2009

Interpretation:

This ratio indicates the efficiency of operations and firm pricing policies. It
reflects the firm’s efficiency with which a firm produces its products.

The ratio tends to rise whenever cost of goods sold decreases and gross profit
rise and vice versa or when sales increases.

The gross profit ratio of the company is increasing from 2005 to 2006 while it has
decreased in 2007, 2008 but has again increased in 2009. This shows that the
company’s sales are increasing and also company is reducing its cost of sales
which ultimately increases the gross profit of the company. While in the last two
years the company’s cost of sale has increased due to which its gross profit
margin has decreased.

Operating profit margin:

15. Operating profit margin


Formula. Operating profit margin=operating profit /sales*100
Operating profit
margin 45.93776754 49.13231012 34.30719084 12.11297995 18.75606386

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Financial Analysis of D.G Khan Cement Company Ltd.

Operatingprofitmargin
60
50
40
30 Operatingprofit
20 margin
10
0
2005 2006 2007 2008 2009

Interpretation:

This ratio indicates the firm’s profitability after taking account of all its operating
expenses. The ratio tends to increase whenever operating expenses fall and
operating income rise and fall when operating profit decrease or sales increases.

The operating profit ratio of the company is showing a mix trend. It is increasing
till year 2006, than there is a decline in the year 2007 and 2008. After that, ratio
is depicting an increasing trend in 2009.

The reason for decline in the year 2007 and 2008 is a rapid increase in the
administrative and selling expenses.

Net Profit margin:

16.Net Profit margin


Formula. Net profit margin=net profit /sales*100
Net profit margin 31.86019 30.39916 25.27361 0.42769 2.912257

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Financial Analysis of D.G Khan Cement Company Ltd.

Net profit margin.


35
30
25
20
15 Net
profit
10 margin.
5
0
-5 2005 2006 2007 2008 2009

Interpretation

This ratio indicates the firm’s profitability after taking account of all interest
expenses and income taxes etc. of the firm. The ratio tends to increase when
net profit rises and decreased when net profit decrease or sales increase at
higher rate than net profit.

The range of ratio has shown a decreasing trend in last five years.

The reason for decrease is that the net profit was decreased in that year. The
reason for this decline in net profit is the addition of new expense namely, other
operating expenses in the income statement of the company. Although provision
for taxation was reduced but finance cost of the company had increased with the
greater proportion, causing net profit to decline and hence reduced net profit
ratio.

Earning Per Share:


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Financial Analysis of D.G Khan Cement Company Ltd.

17. Earning Per Share


Earning per share Earning available for common share holder/No of
Formula. common share outstanding
Earning Per
Share 9.12 10.37 6.43 (0.21) 1.96

EPS
12
10
8
6 E
4 P
2 S

0
-2 2005 2006 2007 2008 2009

Interpretation:

The ratio tends to increase when earning available to common stock holders
increase and falls when paid up capital increase or earning decreases. It has
increased in 2006 as compared to 2005 but decreased in 2007 t0 2008 which is not
good for the company. and it has again increased in 2009.

Price-Earning Ratio:

18. Price-Earning Ratio


Formula Price-Earning Ratio=Market Price Per Share/Earning Per Share
Items Years

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Financial Analysis of D.G Khan Cement Company Ltd.

2005 2006 2007 2008 2009


Market Price Per Share 59.65 121.4 13.31
9.1 10.3 6.4 1.9
Earning Per Share 2 7 3 (0.21) 6

6.5 11.7 6.7


Price-Earning Ratio 4 1 - - 9

Price-Earning Ratio
14.00
12.00
10.00
8.00
6.00 Price-Earning
Ratio
4.00
2.00
-
2005 2006 2007 2008 2009

Earning Yield Ratio:

19. Earning Yield Ratio


Formula Earning Yield Ratio=Earning Per Share/Market Price Per Share
Years
Item
2005 2006 2007 2008 2009
9.1 10.3 6.4 1.9
Earning Per Share 2 7 3 (0.21) 6
Market Price Per Share 59.65 121.4 13.31

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Financial Analysis of D.G Khan Cement Company Ltd.

0.1 0.0 0.1


Earning Yeild Ratio 5 9 5

Earning Yeild Ratio


0.18
0.16
0.14
0.12
0.10
0.08 Earning Yeild
Ratio
0.06
0.04
0.02
-
2005 2006 2007 2008 2009

Dividend Payout Ratio:

Dividend Payout Ratio

Formula Dividend Payout Ratio=Dividend Per Share/Earning Per Share


Item Years
2005 2006 2007 2008 2009

Dividend Per Share 1.5 1.5 1.5


Earning Per Share 9.12 10.37 6.43 (0.21) 1.96

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Financial Analysis of D.G Khan Cement Company Ltd.

Univariate Model

D.G Cement
Univariate Model
Years
Item
2005 2006 2007 2008 2009
Cash flow/Total Debt 28.57 27.87 2.67 (2.78) 5.26
9.3 7.0 3.1 1.2
Net Income/Total Asset
4 5 4 (0.10) 3
Total debt/Total Asset 48.28 43.83 34.44 42.15 51.04

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Financial Analysis of D.G Khan Cement Company Ltd.

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Financial Analysis of D.G Khan Cement Company Ltd.

Multivariate Model
Z Score=.012X1+.014X2+.033X3+.006X4+.010X5
Years
2005 2006 2007 2008 2009
X1=Working Capital/Total Assets 6.33 11.35 22.85 13.75 -5.96
X2=Retained Earning/Total Assets 1.54 6.79 3.40 -0.10 1.11
X3=Earning Before Interest and Taxes/Total Assets 13.46 11.39 4.26 2.90 7.92
X4=Market Value of Equity/Book Value of Total Debts 642.73 371.82 431.36 350.82 423.07
X5=Sales/Total Assets 29.30 23.19 12.41 23.94 42.22

X1 0.0760 0.1362 0.2742 0.164973 -0.07155


X2 0.0216 0.0951 0.0476 -0.0014 0.0156
X3 0.4442 0.3760 0.1405 0.0957 0.261329
X4 3.8563976 2.230946 2.588173 2.10491 2.538412
X5 0.293 0.232 0.124 0.239 0.422

Z Score=.012X1+.014X2+.033X3+.006X4+.010X5 4.6912 3.0702 3.1745 2.6036 3.1660

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Financial Analysis of D.G Khan Cement Company Ltd.

Interpretation:

Formula

Z= 0.012(x1) +0.014(x2) +0.033(x3) +0.006(x4) +.099(x5)


Criteria

Clear Non bankrupt score is: Z>2.99

Bankrupt score is: Z<2

Gray area is: Z between 2 and 2.99

The result of the Z score model of five years is as follows:

The result shows that firm is not Falling in Bankruptcy region in any year for the last
five years so the company has strong Bankruptcy over the last five years.

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Financial Analysis of D.G Khan Cement Company Ltd.

Conclusion

In the comparison of the company’s ratios with the industry’s ratios


we have concluded that company’s liquidity ratios are good from
2005 to 2007 but in 2008 -09 it is weak and activity ratios are
consistent with the industry’s ratios but company’s financial and
profitability ratios are decreasing which shows the firms operations
and earnings are not good as compare to industry.

In short we can say that company has not improved all those ratios
with a higher percentage that a company should improve in relation
to the industry’s ratios. This thing shows the firms better operations
and managerial skills are not good for future prospects. This also
shows company’s weak footings on which the firm is competing with
others and losing its market share every year.

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